• While the national 90-day delinquency rate eased from 3.65% in the 4th quarter of 2010 to 3.11% in the 4th quarter of 2011, foreclosures are likely to remain an issue both nationally and regionally over the next two years.
  • In recent quarters, an emphasis on modifications and short sales has grown in an attempt to staunch the flow of delinquencies into foreclosure and onto bank balance sheets. According to data from the Office of the Comptroller of the Currency, the six-month re-default rate for loans modified in the first quarter of 2011 was 17.0% nationally.
  • Surprisingly, the re-default rate was lowest in California and Arizona, Nevada, and Florida were all in the top 15 performing states. However, the bottom five was dominated by markets in the South and the Midwest. This trend may reflect the fact those states which experienced the sharpest sub-prime correction have been in the process longer.
  • Consequently, many of the worst performing loans have already been through the system leaving those borrowers who were better able to keep up with their loans. These markets have also experienced substantial improvements in their economies and foreclosure rates.
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